Question

Income tax payable by a firm as on the date of dissolution is treated​

Answer 1

Answer:

as preferential credit

Answer 2

Income tax payable by a firm on the date of dissolution is treated​

As preferential creditors

As non-recoverable

As unsecured debtors

As secured creditors

The correct answer is :

As preferential creditors

Explanation :

When a firm is dissolved, whatever income tax is due on it, is treated as a preferential creditor on the date of dissolution.

In case of dissolution of the firm, such income tax is decided by the Income Tax Department on a priority basis by treating it as preferential income tax.

In case of dissolution of a firm, separate firms are formed and new separate firms are to be taxed separately in the next financial year. In such a situation, whatever income tax is due on that firm, it is treated as a preferential creditor and the Income Tax Department continues the process to recover the same immediately.

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